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Suppose that the government makes a one-time investment in new public school buildings, which results in a one-time reduction in current consumption. The new public
Suppose that the government makes a one-time investment in new public school buildings, which results in a one-time reduction in current consumption. The new public school buildings increase the efficiency with which human capital is accumulated. Use the endogenous growth model we discussed in class to determine the effects of this change on the paths of aggregate consumption over time. Explain the trade off between current consumption and future consumption.
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